New Money, Big Bets: Three Takeaways From a Massive Tech Grant to Fight Global Poverty

Perhaps the most fascinating thing about the current moment in philanthropy is how fluid the funding scene is, with big new donors arriving all the time and vast money lining up behind causes or organizations that barely existed a decade ago. 

A new philanthropic order is rising, with a new set of power players and distinct ways of doing business. While it's hard to follow all that's happening, there are a few emerging funders that you should definitely keep a close eye on. 

Good Ventures is one of them. This is the foundation created just a few years ago by Facebook cofounder Dustin Moskovitz and his wife Cari Tuna, and on Monday it announced a $25 million commitment to GiveDirectly, an anti-poverty NGO that was founded in 2008 and engages in direct cash transfers to poor people in Africa via their mobile phones. 

Why is Good Ventures worth watching so closely? For a few reasons, all of which are exemplified in its grant to GiveDirectly, its biggest give to date. 

1. Good Ventures is on Track to Rank Among the Top U.S. Foundations

You don't hear much about Dustin Moskovitz, who left Facebook seven years ago. But he was apparently smart enough to hold on to most of the stock that he received as the company's third employee. As of today, Forbes pegs his net worth at $9.7 billion. That fortune has almost doubled in the past few years, amid a run-up in Facebook's market cap. 

This is good news for nonprofits, since Moskovitz has said that he plans to give away all his wealth during his lifetime. In an interview with Inside Philanthropy, Cari Tuna explained that Good Ventures aims to ramp up its capacity for such grantmaking gradually. Tuna expects that when it hits "peak giving," the foundation will be giving away "hundreds of millions of dollars a year"—which would put it on par with some of the biggest foundations in the U.S., like MacArthur. 

In other words, as big as the grant to GiveDirectly is, it's merely a prelude to much bigger things to come.

Why do Moskovitz and Tuna plan to spend down all their assets in coming decades? Because, says Tuna, “we definitely see a strong argument for giving sooner rather than later.” She goes on: "Giving now puts people in a better position to help themselves," and adds that "the good we do now compounds over time.”

Another, deeper reason for the front-loading approach is that Good Ventures sees rich opportunities to deploy resources to make a difference. Tuna says that it will "never be so inexpensive" to put humanity on a better footing than it is today. “We’re really optimistic about the direction in which the world is heading."

Many emerging philanthropists are rejecting the perpetuity model of foundations, as I've often noted, and Tuna's comments offer some insights into how such funders think. Basically, they imagine that with a big enough push, major problems can be solved or prevented, forestalling the need for greater spending later. Are they right about that? Maybe, maybe not, but this view stands in contrast to the less-hopeful assumptions about human progress implicit in the perpetuity model.

2. This is Another Emerging Funder That Believes in Big Bets

Before this latest gift to GiveDirectly, Good Ventures had already granted the organization over $12 million. So we're talking about a very big investment overall from a young foundation—and toward an organization that's also fledgling in many ways, with a model that's yet to be universally embraced. Direct cash transfers to the poor are catching on with more funders, who see them as a cost-effective way to fight global poverty, but they still have critics.

I'll leave it to other writers to weigh in on the merits of this anti-poverty strategy. What's interesting to me is watching a relatively new funder putting so many chips on a single number. It's risky. 

Tuna says the big grant came about after conversations with Good Venture's close partner GiveWell, a charity evaluator which has helped guide the foundation's global giving to date. The conversations were about which nonprofits Good Ventures might support at a higher level, and came to focus on scaling up GiveDirectly with millions of dollars in new support.

This is the type of discussion that every nonprofit fantasizes about, and GiveDirectly soon produced a detailed proposal for how it would spend big new money, which you can read here. Basically, it requested funding for three things: to make more cash transfers to poor people, to scale up its fundraising operations, and to work with partner organizations, like international aid agencies, to explore the benefits of a greater focus on cash transfers. The $25 million from Good Ventures will go to all these needs, and yesterday, Tuna described the exact breakdown of how the money will be spent in a blog post.

She also writes of the larger vision here: "GiveDirectly has ambitious goals. It envisions a world in which billions of dollars are transferred directly to the poorest people every year."

Will GiveDirectly succeed in spearheading a paradigm shift in global development assistance? I guess we'll see, but the group definitely has a big idea, and the fact that Tuna and Moskovitz have bought into it means that the idea has a much better chance of gaining real traction.

This is something we're seeing more of these days: A major funder single-handedly elevating a new approach to a problem almost overnight with a large bet. Earlier this year, I wrote about Herb Sandler and the Sandler Foundation, which has done this in several areas—like by bankrolling ProPublica, the nonprofit investigative reporting group. 

3. Backing New Ideas, But With Due Diligence 

In a recent article in the Stanford Social Innovation Review, two veterans of the funding scene fretted aloud about emerging philanthropists ignoring decades of lessons learned by past funders and reinventing the wheel. This is a real risk, to be sure, with so many newcomers pouring into philanthropy. Another risk is that ambitious but green funders in a rush to bankroll disruptive change will back dumb ideas, without first doing their homework. 

That's not the case here, though. Good Ventures has moved carefully toward its big bet on cash transfers over several years, guided by GiveWell, with a keen eye on research findings.

One appeal of investing in GiveDirectly is that the organization itself acknowledges that its idea still needs further testing, and it's been closely studying the effects of cash transfers—looking at how recipients spend the money they receive and how it affects their lives. This research will continue at a stepped-up level with Good Venture's funding. Tuna writes:

All of GiveDirectly’s cash transfers are part of rigorous evaluations that test the impact and design of its program. That means donations to GiveDirectly not only help extremely poor people in the short term, they also help improve its model for the future... GiveDirectly is exceptionally open, honest, self-reflective and data-driven. We have a high degree of confidence that it will use these funds wisely and that when problems arise we will learn about them. 

Looking at the bigger picture, Good Ventures has been obsessed with due diligence since its earliest days. When Moskovitz and Tuna decided to turn to large-scale philanthropy, they had innumerable conversations with many other funders and experts to learn about best practices and mistakes to avoid. Those conversations led them to GiveWell, which evaluates giving opportunities for funders, and which has helped choreograph Good Venture's global grants.

In other words, rather than make their own judgments about where to put money, or relying on a consultant or two, as many philanthropists do, Tuna and Moskovitz turned to an outside organization with a well-developed methodology for evaluating grantmaking opportunities. 

Does GiveWell offer the best possible advice? I'll leave that question to others, but this is another example of the resources available to emerging donors who neither want to shoot from the hip nor build up their own expert staff, a trend I've written about in the past. Newcomers to philanthropy can do a better job today than ever by tapping into those resources. 

Good Ventures is also intent on deepening its knowledge through its Open Philanthropy project with GiveWell, which seeks to increase the amount of sharing and learning within philanthropy. We wrote last year about that initiative and since then, it has received a grant from the Fund for Shared Insight.

As Tuna describes it, the work of the Open Philanthropy project is critical to creating the eventual capacity for Good Ventures to give out hundreds of millions of dollars a year. "We're building a foundation of learning," she says. While Good Ventures is ambitious, with a lot of money to give away, it's in no particular hurry. “We have a bias toward giving as much as we can," Tuna says, "as soon as we can give confidently.” 

It will be interesting to see what comes next for this funder.